MR. CARNEY: Good morning, everyone. Thanks for being with us for this off-camera gaggle, but on the record. I have with me this morning, and I’d like to start with him, Mr. Jeff Zients. He is the Deputy Director for Management at the Office of Management and Budget. He is also the President’s chief performance officer, the first ever chief performance officer.

He has overseen the process, the review of -- the review that has led to the announcement this morning of the President’s proposal to request consolidation authority from Congress so that he can make our government more efficient and more effective for the American people.

So I will turn this over to Jeff, who will make a few remarks, take questions from you on this initiative. And if you hold questions on other subjects until after Jeff leaves, I will remain and answer them, and then get you out of here in time for the 11:00.

Okay, with that, I give you Mr. Zients.

MR. ZIENTS: Thank you, Jay. Thank you, everybody. Now, I thought I’d start just with a little bit of background, then as Jay said, open it up for questions.

Really, since the very beginning of the administration, the President has been focused on making government more accountable -- getting rid of waste, saving money and making government services more responsive. It’s really what companies across America have done: increase productivity, save money, and improve service quality.

And as you know, we’ve done a lot. We’ve gotten rid of billions of dollars of unneeded real estate. Contracting -- across the government total contracting actually decreased last fiscal year, fiscal year ‘10, for the first time in 13 years. And we’ve reduced those improper payments. Those are the payments to the wrong people, the wrong place, the wrong time; those payments to people that are in jail. As an example, they decreased by more than $20 billion.

Today, the President is asking Congress to pass consolidation authority, which is a critical next step in our efforts to continue to streamline government, save money and improve government services.

The government we have is not the government we need. The last major reorganization of the whole government was done more than a half century ago, led by Herbert Hoover. Since then, agencies have been layered on top. Rarely has an agency been downsized or eliminated. So we’ve added incrementally over time.

The President is asking for the reinstatement of the same authority that presidents had, from Hoover through Reagan, for more than 50 years. And that is to submit to Congress specific proposals for a fast-track up or down vote. But there’s an important distinction here, and that is that the consolidation authority requires any proposal save money and reduce the size of government. Again, in the past, government has been added to incrementally. Consolidation authority requires saving money and reducing the size of government.

The bottom line is that the President, like any chief executive, needs the ability to streamline and modernize operations, and save money and improve service.

The President will also announce today that his first proposal, under the consolidation authority, would be to consolidate six agencies focused on business and trade. I’ll run through those.

It’s the core business and trade components of the Department of Commerce. Over half of the Commerce Department’s budget is actually NOAA, so NOAA would move to the Interior Department. But the core business and trade business components of the Department of Commerce -- along with SBA -- the Small Business Administration -- USTR, Ex-Im, OPIC and the U.S. Trade and Development Agency. All six of those consolidated and integrated into one.

The most important reason for doing this is to better serve businesses, especially its small businesses. Today, when a small business is thinking about exporting for the first time, there are multiple websites, forms and applications. The consolidated department will have one website, one telephone number and one mission: to help American businesses succeed and make it much easier for small businesses to access government services.

While we wait for Congress to act and pass consolidation authority, given the importance of small business to the economy, the President is elevating the Small Business Administration to his Cabinet. The administrator, Karen Mills, will join the Cabinet.

With that background, why don’t I open it up for questions?

MR. CARNEY: Why don’t we start with Associated Press?

Q Jeff, just on this larger issue, it’s something a lot of the administrations have tried to do in the past, reorganize government, make government smaller. Do you feel like you have a window of opportunity here? I mean why is this time different, I guess?

MR. ZIENTS: Well, first, as I said, for 50 years or so, presidents had this type of authority, so this is not new. I think we would all agree we’re at a point where we need to make sure that every taxpayer dollar is well spent. That’s a bipartisan belief, and I think we can all believe that making government operations leaner, smarter, more efficient is essential. And consolidation authority is a very important tool for ensuring that we achieve a smarter, leaner government.

MR. CARNEY: Matt.

Q What happens --

MR. CARNEY: I called on Matt, if I could just -- let me just do this in order.

Q Sorry, the Republicans are already kind of scoffing at the idea of this being fairly modest relative to the size of the overall federal budget. And they’re saying that the President has presided over one of the largest expansions of government ever. So in view of that attitude, in view of the gridlock in D.C., what makes the administration think that they’re going to be able to get the up or down -- the authority for up or down votes to come from this Congress? And maybe Jay would weigh in on that, because it’s kind of a political question, too.

MR. ZIENTS: Well, again, presidents have enjoyed this authority for 50 years. We’re at a point in time where we have to streamline government, make sure every dollar is well spent, improve the quality of government services. The proposal that the President is outlining, which would be his first specific proposal, would be one of a series of proposals across time that collectively would save billions of dollars.

MR. CARNEY: What was the political aspect of it?

Q Well, considering the gridlock in D.C., the in ability to move legislative projects past the Congress with Republican resistance, I mean, you’re asking them to give the President somewhat of a carte blanche and move straight to the up or down vote without any kind of intermediary steps involving lawmakers.

MR. CARNEY: Well, two points. One, I think we do not share the pessimism about -- that others have expressed about an inability to get things through Congress. We think this is the kind of thing that should have bipartisan support. Republicans have expressed a desire to make government less costly, more efficient, more effective. We agree with that assessment. That’s what this is designed to do.

The consolidation authority would require, as Jeff said, that it would reduce costs overall, would save the federal government money. That is something that we certainly would expect Republicans would want to agree to. So every elected official in Washington has to explain to his or her constituents on this issue, as on others, why they oppose it, if they oppose it.

And we, again, think this is very common sense, this very much what we need to make our government more efficient and more effective, and we look forward to working with Congress to get it done.

Q Can you clarify on the EPA? I mean the SBA, sorry. Moving it to a Cabinet agency requires what? And nominating the administrator as a Cabinet Secretary means confirmation, right?

MR. ZIENTS: No.

Q No?

MR. ZIENTS: The President has the ability to designate his Cabinet, and the SBA will be now part of his Cabinet.

Q So it could get done?

MR. ZIENTS: Yes.

Q But just to clarify, so you would -- the President would lift the SBA into Cabinet status, but then with the consolidation authority eliminate the SBA as a separate agency?

MR. ZIENTS: That’s right. The SBA would be represented in the new agency by the secretary of the agency that is focused on business competitiveness.

Q So it’s a short timeframe.

MR. ZIENTS: We hope to get consolidation authority very quickly so we can begin to streamline government and save money and improve services. The first specific proposal would be the one I outlined.

Q Follow on that?

MR. CARNEY: Yes.

Q Jeff, you just said the agency focused on business competiveness, is this going to be the Commerce -- I mean, is that going to be -- what is the --

Q What’s the name of the agency?

Q -- the name of the new agency?

MR. ZIENTS: The name of the agency will be worked out through the process of submitting the specific proposal to Congress once we get the consolidation authority.

Q And will John Bryson be the head of that department?

MR. ZIENTS: The President will decide once the new department is created who the secretary is.

Q Are you effectively eliminating the Commerce Department? Is that what you’re saying?

MR. ZIENTS: We are effectively taking the core business and trade components of Commerce and bringing those -- integrating those with the other five agencies that I mentioned in creating a new streamlined department that will save $3 billion and better serve businesses.

The other component of Commerce --

Q NOAA --

MR. ZIENTS: NOAA, which is more than 50 percent of the budget of Commerce, will go to the Interior Department.

Q So what’s left of Commerce that goes into that?

Q What about the Census Department?

MR. ZIENTS: The Census will be part of the new department. There will be a division of statistics, and the Bureau of Labor Statistics from the Labor Department will be integrated into the Census and the BEA for one economics statistics department, which will save money and help modernize our -- continue to modernize our statistics.

Q So the new statistical agency would include the Census Bureau and the Labor Department statistics?

MR. ZIENTS: And BEA, which is part of Commerce today.

Q Okay, and any of the other government statistic agencies?

MR. ZIENTS: There’s one component from the National Science Foundation.

Q And Commerce would cease to exist?

MR. ZIENTS: I’m sorry?

Q Commerce would cease to exist?

MR. ZIENTS: Yes. There will be one new department that integrates the six departments -- the six agencies.

Q Which will be housed where?

MR. ZIENTS: That will be --

MR. CARNEY: Can you guys -- can we -- I just want to return to not just shouting questions and calling -- go ahead, Laura.

Q If this proposal were to go through, would the SBA administrator remain in the Cabinet even though SBA would be part of the new agency?

MR. ZIENTS: There would be one secretary of the new agency which is focused on small businesses, business and competitiveness. That person will be part of the Cabinet. Until then, given the importance of small business, the President has decided to put the Small Business Administration administrator on his Cabinet.

MR. CARNEY: Kristen, then Christi.

Q Thank you. How many -- I just heard you mention the $3 billion figure for savings. How many jobs could potentially be lost under this reorganization? And also, the President talked about doing this initially during his State of the Union address? Can you talk about why now? Why not put forth this type of proposal sooner?

MR. ZIENTS: The answer to the jobs component of it is 1,000 to 2,000, and that can be handled through attrition.

This is hard, important work, and we spent a lot of time out and about talking to businesses, particularly small businesses, hundreds of businesses, getting input on what works best and how can we make things work better, how can we streamline. We spoke to the current heads of these agencies. We solicited ideas from frontline employees through a website.

So this is based on a lot of work and analysis. It’s an important decision, and one that’s well thought through, and it’s driven by how do we best serve our customer in this situation, which are businesses, small, medium and large businesses; and at the same time, how do we save money.

MR. CARNEY: Christi.

Q Two things. The 1,000 to 2,000 jobs, what percentage is that of the total payroll of those agencies as they exist right now?

MR. ZIENTS: It’s -- we can follow up with an exact number, but it’s a few percent. Few percent.

Q A few percent?

MR. ZIENTS: Yes.

Q So you’re talking about cutting the total by roughly what?

MR. ZIENTS: It’s $3 billion over 10 years; on an FTE basis, it’s a few percent.

Q And how long does it take that attrition to do away with the number of jobs you’re talking about?

MR. ZIENTS: Across a couple of years.

Q A couple years. And also, could you just explain the consolidation authority a little bit? Where does it derive from? What happened to it? Why did it go away? How did it work?

MR. ZIENTS: It sunsetted under Reagan. And again, what we’re doing here is reinstating something that existed for that 50-year period of time, but with a very important change or requirement, which is that we will save money, reduce the size of government. The history of reorganization authority is that it was used more to add to government than it was to streamline or save money. Consolidation authority requires saving money, streamlining government.

Q And why even go and ask Congress for this authority, given the resistance that it’s likely to face? Why not instead -- wouldn’t there be a way to figure out how to do this through a “We Can’t Wait” initiative?

MR. ZIENTS: We’re doing all we can. To do this type of consolidation requires legislation, legislative authority to do it. You can’t do this through executive action.

At the same time, the President, about 75 days ago -- because I know we’ve got 15 days left on our deadline -- ordered us, directed us to launch a one-stop website, which we will do in the next couple of weeks, which will allow small businesses finally to go to one website to understand the various services that different agencies can provide.

So we’re doing what we can do. But to realize this cost savings, the $3 billion, and to integrate and create improved service, we need the authority and then the specific proposal for this new department to pass.

MR. CARNEY: Dave.

Q This might be better for Jay, I don’t know. But in Hawaii a couple weeks ago you guys described the payroll tax cut as the final must-do legislation of sort of -- as we head into the rest of the year and possibly the election. But would you add this to that? And how would you describe how far the President is willing to go on this one to sort of engage in a real potential fight with Congress, or if they want to add their own --

MR. CARNEY: That’s a good question. The payroll tax cut must be extended or else taxes will go up on 160 million Americans at just the wrong time. We fully expect Congress to extend the payroll tax cut for the remainder of the calendar year, to extend unemployment insurance for the remainder of the calendar year, and to do so without drama, with political brinksmanship, because it’s the right thing to do and it’s something that, in the end, as it should have in the beginning, garnered broad bipartisan support.

This is a proactive initiative that the President is putting forward. We absolutely, as Jeff said, hope that Congress will act very quickly to pass the consolidation authority, because Democrats and Republicans alike have a keen interest in making government more efficient and in doing what this specific authority would require, which is reducing the size of government and saving money.

So we want this to happen as soon as possible. It differs from the payroll tax cut in that it is absolutely essential that Americans’ taxes -- 160 million Americans don’t see their taxes go up on March 1st.

Mark.

Q Two questions. One, I’m wondering whether this also reflects in any way a dissatisfaction with the way the Commerce Department functions as it’s currently organized. And then secondly, is there any danger that by taking USTA and merging it into something else, you sort of make the trade agenda and the importance of reaching further trade deals or maybe even a global trade deal, you end up taking that position and appearing to diminish its importance?

MR. ZIENTS: Good question. The U.S. Trade Representative will maintain his Cabinet status, and this will strengthen our trade enforcement, our trade promotion, our export promotion, our financing for exports by integrating them into one department. So this strengthens our trade position.

Your Commerce question, that’s a structural issue. The Department of Commerce does a great job with the set of services it provides, but if you take something like trade enforcement, their trade enforcement functions at several different agencies in addition to Commerce, so bringing them all together will make us more effective and save money across the board.

MR. CARNEY: Mike, and then Brianna.

Q Yes, you said that this was the first major reorganization since -- and I’m sorry, was it Hoover, or FDR?

MR. ZIENTS: Looked at the whole government, yes.

Q How do you contrast that, though, with the reorganization that happened after 9/11 that created the Department of Homeland Security? How is that different or more expansive?

MR. ZIENTS: Well, the Hoover commission looked at the whole of government. Obviously DHS was a new department around a set of agencies and bureaus. This is a new department that will be very integrated, that will save money, that we’re going to plan for in advance in terms of how we realize the cost savings and the efficiency gains and the service quality improvements. And when I -- I guess just lifting up again, DHS was the creation of one new department; Hoover was a look across government. Consolidation authority gives the President to submit specific proposals like the one he’s outlining today that save money and improve service at the same time.

So once given consolidation authority, we anticipate this would be the first proposal, but there would be many thereafter.

MR. CARNEY: A couple more for Jeff. Yes, Lesley.

Q You said that the consolidation authority sunsetted under President Reagan. Has any other President tried to reauthorize it since then, and what was the track record on them?

MR. ZIENTS: There have been some attempts -- we can get you more background -- I think President Bush -- obviously it has not been reinstated, and no one has positioned it as consolidation authority, which I think is essential in these times, that we do more with less, that we save money and improve services at the same time.

So I think that we can all -- it’s a bipartisan issue, as Jay said, to streamline government, make sure every taxpayer dollar counts. I think we’re at a point in time where we all can agree that the chief executive needs this authority.

MR. CARNEY: George, and then --

Q I just wanted to make sure that I didn’t misread your answer just now on USTR. USTR would be in this new department but would retain Cabinet status? Wouldn’t be reporting to the new secretary of the --

MR. ZIENTS: Be reporting both -- it’s similar to the U.N. ambassador, Susan Rice, in terms of reporting in to the Secretary of State and being part of the President’s Cabinet. Similar here. Part of the integration and making sure that we’re strengthening our trade and export strategies overall is that this be integrated into this new department at the same time the U.S. Trade Representative would maintain his or her Cabinet status.

MR. CARNEY: This is going to be the last one for Jeff. Donovan. Oh, I’m sorry, Brianna and then Donovan. I did call on her before and then forget.

Q Thank you. So the umbrella, sort of asking for the congressional authority and then specific votes on different proposals, this being the first, will the other proposals -- I mean, how quickly do you plan -- is there going to be a series? And will you be looking for things that have what you would argue should be bipartisan consensus like this specific one, or are we going to see other ones that might not be --

MR. ZIENTS: We’ll be looking for terrains that are fragmented, inefficient, where we can achieve cost savings and service quality improvement simultaneously. So once we get the consolidation authority, first we will be working to get the very specific proposal in the terrain of trade and competitiveness and business that I outlined. At the same time, we’ll be looking to our next terrains, and again, we’ll be looking for areas where we’re fragmented, inefficient, where streamlining can both save money, which will be a requirement, and improve service at the same time.

Q So is that the sole requirement, or is it something that you think you could get buy-in from Congress?

MR. ZIENTS: I’m sorry?

Q Individual proposals. I’m just wondering if there’s been partisan bickering over some of the proposals.

MR. ZIENTS: You know, I think that it’s important that these be -- that you have the fast-track authority. If not, you run into a lot of special interests, jurisdictional lines in Congress. There’s a lot of resistance to this. So having that fast-track authority, the consolidation authority is critical.

Q How many proposals? How many? I’m just -- every month? Every --

MR. ZIENTS: I think it’s one step at a time.

Q Are there several?

MR. ZIENTS: Hopefully that first step comes very quickly, we get consolidation authority. Once we get it, we just outlined what the specific proposal -- what the outline of the specific proposal would be, it would be much more detailed at that point working together with our agencies to make sure that we have a plan that’s fully integrated and that saves the money we talked about and provides better service.

MR. CARNEY: And these are done, obviously, after careful review and consolidation that Jeff has led.

Q So the fast-track is to avoid some of that jurisdictional and special interest lobbying, basically?

MR. ZIENTS: The fast-track authority is needed to get these hard things done, and to make sure that this doesn’t get bogged down in amendments and special interests and all the rest.

MR. CARNEY: Donovan, did you --

Q Yes, mine is very bureaucratic. Do you have any paper on this, on like -- you mentioned a lot of detailed things about this section.

MR. CARNEY: 11:15 a.m., I’m told, we’ll have paper.

Q Thank you.

Q Will you be sending this up or asking Congress to develop it?

MR. ZIENTS: Consolidation authority, the bill, will be sent up in short order --

MR. CARNEY: When Congress returns from recess.

MR. ZIENTS: In short order.

MR. CARNEY: Last one, and then I’m going to take questions. We’ve got a few minutes until you guys have to go. So if you have questions on other subjects -- is that a yes?

Q Jeff, what are the costs associated with doing this consolidation with elevating SBA to Cabinet level? I mean, is this --
MR. ZIENTS: There’s no cost associated with elevating SBA to Cabinet level.

Q -- consolidated departments, the DHS consolidation turned out to be very expensive.

MR. ZIENTS: Factored into our cost savings is this transition period of time where we can handle, through the current budgets, the transition. And then the cost-saving kicks in, and that’s the $3 billion.

Q There’s going to be a lot of concern on the Hill about consolidation of presidential power. I mean, given that you were actually able to establish a whole new agency and a Department of Homeland Security without this authority, why do you necessarily need this type of fast-track authority to do this?

MR. ZIENTS: Well, I think the DHS was in a period of crisis, and it was the creation of something new. We’re talking about streamlining and saving money, and I think that’s always even more difficult to do. And again -- and we don’t see one opportunity to do this, there’s going to be multiple opportunities to do this. Given the imperative that we save money and improve government services, we need this authority.

Q Thank you.

MR. CARNEY: Thank you, Jeff.

MR. ZIENTS: Thank you. Thank you, everybody.

MR. CARNEY: We’ve got about five, six minutes on other subjects.

Yes, sir.

Q Jay, on the New York Times piece this morning, has the administration directly told the Ayatollah that closing the Strait of Hormuz would provoke an American response?

MR. CARNEY: We have a number of ways to communicate our views to the Iranian government, and we have used those mechanisms regularly on a range of issues over the years.

I’m not going to get into the details of those communications or mechanisms, but any message that we have delivered -- and this goes to your question -- to the Iranian government would be the same as what we’ve said publicly.

So we obviously have means of communicating with the Iranian government. We use those means and methods and -- but our message privately -- we deliver the same message in private that we deliver in public.

Q How serious does the administration take these threats? Is there a concern that this may be tilting towards some sort of military action?

MR. CARNEY: The United States and the international community have a strong interest in the free flow of commerce and freedom of navigation in all international waterways. We have consistently communicated our views on that subject and concerns on those issues to the Iranians and to the international community broadly.

I wouldn’t want to characterize the nature of this issue right now beyond saying that our views are clear, we’re expressing them publicly and privately, and I’ll leave it at that.

Yes, Matt.

Q Myanmar freed 200 prisoners, and they promise to free more in amnesty. The U.S. has said that freeing political prisoners was crucial to even considering the lifting of economic sanctions. Will that process now get underway of giving consideration to --

MR. CARNEY: We have seen those reports, Matt, thank you for the question. If true, that would be a positive development. But I don’t have -- I have no new announcements with regard to that.

Julianna.

Q Just back to Iran. So does that mean, then, that the White House does agree that -- with Panetta and other administration officials who have said that any disruption or closing of the Strait of Hormuz would be considered a red line?

MR. CARNEY: Well, without using -- I would refer you to the comments of the Secretary of Defense, but we are -- this would clearly be an issue because we have a strong interest in the free flow of commerce and freedom of navigation there and around the world. And obviously that’s a very important part of the world.

So I can almost anticipate other questions about how we might react, and I’m not going to -- we take no options off the table. But we are engaged in the kinds of diplomatic efforts that you would expect in a situation like this and will continue to make our views on this known very clearly.

Q But you won’t go so far as to call it a red line?

MR. CARNEY: It’s not that I won’t, I’m just -- he kind of outranks me on issues like these, so I would just point you to his comments.

MR. EARNEST: Let’s do two more, Jay.

MR. CARNEY: Mark. And then Brianna.

Q Do you have any other announcements on Myanmar?

MR. CARNEY: I don’t. That’s your question? Awesome. (Laughter.) No, I don’t have any other -- I don’t have any -- but it’s a fair question. I might have forgotten an announcement. But no, I don’t. Not at this time. As I said to Matt, we’ll -- these reports suggest a positive development. It is the kind of development that we expressed -- that we’ve made clear would be a good one if it were to take place. And we’ll I’m sure have more to say about it as things progress.

Brianna.

Q There’s a published excerpt of Michael Hastings’s new book out that quotes a State Department official talking about President Obama during a visit to Iraq complaining about taking photos with soldiers. And I’m just wondering if you’re responding to that.

MR. CARNEY: I saw that. It’s just -- I know from my time with him that there is nothing he would rather do than spend time with the men and women in the military. And so I -- anonymous, unnamed, single sources saying something ridiculous like that, I wouldn’t put too much credibility in. So that’s all I have to say about that.